CHRIS HAMMER: We're joined now by Andrew Leigh, the Shadow Assistant Treasurer and Labor member for Fraser here in the ACT. He's in the studio. And joining us via Skype, Andrew Laming the member for Bowman.

ANDREW LAMING: Good morning.

HAMMER: Andrew where are you?

LAMING: I'm down at my local poultry establishment, here in Bowman we do grow something, and it's chook meat, so that goes all over the country and obviously one of the cheapest forms of protein on the Australian household table is chicken meat.

HAMMER: Okay. Let's get to the issues of the day, first, the welfare system, the McClure Report. Andrew Laming, there's 800,000 people receiving the disability pension, and it costs about $15 billion a year, is that too many people and too much money?

LAMING: It's not about either of those two figures it's actually about making sure those that need the safety net can access it, and the McClure report is just about finding ways to maximise both individual and community capacity and finding ways to work with employers to make sure that anyone who can do some form of work and be part of the economy can manage to do that within a welfare system.

HAMMER: This division between those permanently and temporarily disabled, is that a sensible way to divide people?

LAMING: Well as a former GP it seems reasonable. If someone has a disability impeding their ability to earn an income you want to make sure they're looked after, but of course if it's not permanent, you want to make sure there's adequate review so that those who possibly can return to the workforce, not be out of it for too long, can actually be brought back in and reconnected.

HAMMER: Now as a former GP, it's probably relatively easy to assess disabilities when they're physical disabilities but psychological disabilities can be episodic. Does that make it more difficult?

LAMING: It makes it more challenging dead right, both for employers and for clinicians, but it doesn't mean we don't stop trying. Every OECD country faces the same challenge, we just need to make sure that we're doing as well as everyone else, giving people with mental health issues a chance to be in the workforce.

HAMMER: Andrew Leigh given the amount of money, given the amount of people within this system it makes sense for the government to review it doesn't it?

ANDREW LEIGH, SHADOW ASSISTANT TREASURER: Chris, it's important to realise what we spend on this payment. We're the second lowest spenders on social services in the developed world and the number of people on DSP has risen just in line with the population over recent years, not faster. In order to get onto the DSP you have to be unable to work 15 hours a week and you have to show that you've been looking for work for 18 months. At the end of that you get a payment that's around $20,000 a year. Hardly a king’s ransom. So it worries me that that this Government is looking to make cutbacks in that area of policy while at the same time it's giving away $50,000 to millionaire families.

HAMMER: So you believe that this review is not about making the system better and better directed, it's about saving money?

LEIGH: Chris, every review this government does, whether it's commission of audit, federalism, or disability, is like a Stephen King novel. It might be interesting in parts, but you know it's going to end badly. I don't think people with disabilities are reading the accounts of this review thinking it's going to mean they'll get more generous payments. They know that when this Government says 'simplification' that's code for cuts.

HAMMER: Okay. Andrew Laming, Andrew Leigh makes the point about the level of payments, it's something like 45 per cent of people on the DSP are living below the poverty line. That's twice as much as the OECD average. Isn't the case that there should be more money going into this area and more support rather than trying to you know narrow the target down?

LAMING: You're quite right, that's exactly what we need to be doing, that's why we're doing the review. To make sure that those who need the payments get them. The whole point about the flat rate dsp arrangement is that really regardless of the level of disability you're getting exactly the same payment and i think the payments need to more closely approximate your needs, your needs for housing, the size of your family, and the level of your disability. And I sense that that's where McClure may well be going.

HAMMER: So you think maybe the end result may be that less people receive the DSP but those who do, receive more generous support?

LAMING: I can't speculate about the former, but certainly I would like to see personally more payments to people who are more severely disabled. And that means identifying those individuals and making sure they get the care they need, and I think the NDIS was heading in that direction. The DSP arrangements with three quarters of a million people getting exactly the same payment, with every imaginable variation in that disability, often signed off by a local GP, just isn't good enough.

HAMMER: Andrew Leigh, I mean that's fair enough. Is your view that the system as it exists now is working, or is this type of review necessary?

LEIGH: I think the system's fundamentally working, Chris. We made significant changes in government to what is called the impairment tables, focusing on the kind of work that people were able to do rather than the particular nature of the disability. As a result the number of people accessing the DSP payment each year declined and as I said it hasn't been increasing faster than population. So this notion that there's a crisis in disability payments is overblown. I also worry too that this is a Government which is increasing the pension age, breaking it's promise there. We know that many people are on disability support payments when they've been working tough physical jobs and their bodies just aren't able to do them any longer. Pushing up the pension age and cutting back access to disability payments leaves older Australians in a tough place.

HAMMER: Now the review doesn't just look at disability, as you say it covers a whole lot of welfare payments. One of the recommendations is to cut the categories of payment from something like 75 down to sort of four key categories. Now as an economist you'd understand the administrative simplicity of that, that you can save money in the back office it means there's more money up front, so it kind of makes sense to do that doesn't it?

LEIGH: I think simplicity has much to be said for it, but let's not forget that ours is the best targeted social safety net in the developed world. I said before we spent the second lowest amount, but we target better than anyone else. We give twelve times as much to the bottom fifth, compared to the typical developed country that just gives twice as much to the bottom fifth. And that means that our social safety net is able to be a lean and efficient one, sustained by relatively low taxes compared to developed countries. You wouldn't get a sense of any of this if you listen to people like Kevin Andrews who suggest that Australia is a high tax, high spend nation. We're simply not compared to most countries around the world.

HAMMER: Andrew Laming if Andrew Leigh is correct in our welfare system is efficient, is well targeted, isn't all this debate about cutting 75 categories to four categories, academic? Isn't it better to have all those bureaucracies concentrating –

LAMING: Well even if I accept what you're saying, you've got to remember that the point of the review is making sure that people who need the support get it. People who can possibly go back to work can. These are the areas that aren't good enough, even though you might want to talk in overall quantums and say that the amounts are right or where it's directed is correct. Not enough people are getting back into work, and too many people are dislocated from economic opportunity, and as I've made the point already, people who are really truly disabled are getting the exact same payment as people for whom there's virtually no additional expense associated with their disability, and that's the problem. So all of those things are going to be looked at.

HAMMER: Does it concern you that there doesn't seem to be a groundswell of support then in the disability sector and service sector for this review? It seems to be –

LAMING: Well in essence, obviously, most people are concerned that they may lose what they're receiving at the moment and I can really appreciate that but I hope that people who deserve more help can get it, and obviously people who don't have a disability requiring this kind of a payment, should be off it and back to work. So both of those levels I think we can make progress even though initially people may not be too enthusiastic about change.

HAMMER: Okay, let's move on, different subject. Andrew Leigh, aluminium smelters. Huge user of electricity, should they be exempt from RET, being included in the renewable energy target?

LEIGH: Of course a basic principle of economics is that systems work better if they're fair and operate evenly across the board, rather than if you have particular carve outs. This open letter signed by a very large number of Coalition backbenchers, I'm not sure whether it includes Andrew or not, calls for scaling back the Renewable Energy Target despite the fact that the Renewable Energy Target is already working to push down power prices. We have millions of Australians living or working underneath solar panels, and we've got a renewable energy target that is effective. And yet, the Government is having it reviewed by a climate change sceptic. They're wanting to shut down the effective and efficient carbon pricing mechanism after we've had the biggest fall in emissions in a quarter of a century.

HAMMER: You say carve outs don't work, but Labor granted crave outs to aluminium smelters in the original emissions trading scheme and I think under the carbon tax as well. I mean these are export exposed industries. Surely they'd be served with special treatment?

LEIGH: We know from the evidence on the renewable energy target Chris that it's an effective policy that is working overall to bring down power prices. I think the idea that we ought to scale it back in an dimension is mistaken. We have to act on climate change, Chris. We've got records being broken across the board. Climate records. We've just had the hottest summer on record and the hottest year on record. Thirteen of the fourteen hottest world temperatures are since 2000. And we've got mechanisms in the Renewable Energy Target and carbon price that are working. And scaling them back is a real mistake.

HAMMER: Okay Andrew Laming what do you think about this proposal to exempt aluminium smelting from the renewable energy target.

LAMING: Well obviously, Andrew and I are both economist and we know about secondary effects. There's no point shutting down our aluminium sector because we know through secondary and unintended consequences just other smelters overseas that are dirtier and not paying this RET, simply open up and increase their output. It doesn't help anyone, and it really hurts Australia. I don't make public comment about RET. I do it privately with the leadership team, but I'm certainly concerned that we have Swiss cheese emissions trading schemes all around the world full of exemptions. If aluminium was one of them, I can guarantee you that in any other country it would be exempt. but not here in Australia. We need to make sure we're moving as a pack and not way out in front. Aluminium's a great example of where we're basically punishing our own sector for no great gain and it's certainly not going to change the climate as a result.

HAMMER: But if you exempt aluminium, isn't the effect that the cost of moving the RET is passed on to ordinary consumers. We end up paying it and the government has made a great deal of noise about how much people are going to get back when the carbon tax is scrapped but at the same time you know there's an imposition of a greater cost on consumers if you exempt aluminium?

LAMING: Well, there's two elements there. Firstly, I was only talking about the secondary effects and the loss of the sector and jobs. But secondly you've got to remember that at the moment it's pushing prices up because we're paying large feed in tariffs ton people with solar panels. Way more than we're saving from the power they're adding to the system. So we know in the medium term this is pushing prices up. So the concern is that if every other country hasn't got a RET, if all our trading partners aren't doing the same thing, then we're individually punishing on whipping our aluminium sector. That's not a good thing. If you exempt them then you just have the next sector complaining and wanting an exemption, or you have Tasmania complaining and wanting an economic zone exemption. So the whole thing starts to unravel. That's why it's a very delicate decision.

HAMMER: Sounds like you're not completely convinced that exemptions are a good idea.

LAMING: I'm not convinced that the RET is working at the moment, but I welcome all sorts of modelling coming to the table. Fascinating that the clean energy sector gives you one set of modelling and ACIL can give you something completely different. So yeah, it'll be a fairly complex field.

HAMMER: Okay, a final topic, it looks like a couple of asylum seeker boats have appeared off Christmas island but we know very little information about what's happening. Now the government maintains it doesn't want to talk about operational matters because it signals to the people smugglers what's going on. But Andrew Laming, surely it's possible to give some more information such as whether the people are safe or not, whether the ones who've been picked up - not where they've been picked up, but whether they're okay?

LAMING: Well the guys and gals up at [Darwin-based northern command centre] Norcom are doing an amazing job protecting our borders, and I know that they are in very very good hands if there is an interception. They are well looked after and I trust those authorities. But the bigger question is how much of this should be on the front page of every newspaper in the country and I think under Labor there was nothing enlightening from that experience of simply having cameras pushed into the faces of these people. I just think that it's completely up to the leadership to decide what they want to do. They're not going to hide anything. They're just going to release information as there is a public interest, and right now I just don't think a headline every day achieves that.

HAMMER: So they're not hiding anything?

LAMING: Of course not, and it's impossible to. The levels of scrutiny are way too high. These individuals on these craft are on the mobile phones all the time talking to chosen people around Australia. So there's no hiding information, it's just a matter of whether we feed the media frenzy that in turn emboldens more people to come.

HAMMER: Andrew Leigh, what do you think? The Government's not hiding anything?

LEIGH: If this had occurred while Labor was in government Chris, Scott Morrison would be out holding a press conference, probably in front of that billboard that he used to drive around the country which had listed on it the number of asylum seeker arrivals. Since coming into government he's completely flipped his position. Instead of thinking that asylum seeker arrivals warrant a press conference, he thinks they don't even warrant a press release. I think Australians are frustrated by an Immigration Minister that isn't willing to be straight with them. I understand that this is a difficult area of policy, but I ask for a bit of honesty from their political leaders, and if Australian assets are being used to intercept an asylum seeker boat - and I share Andrew's view about the courage and integrity of our men and women in the navy and customs - then Australians ought to know about it.